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Monday, 6 September 2010

Equity funds investing in the Middle East and North Africa (MENA) are sitting on high cash piles, signalling a lack of conviction and absence of viable opportunities in a region touted as the next big emerging play.

Research suggests MENA funds are holding as much as a quarter of their assets in cash against a more usual global average of 2 to 5 percent, suggesting the bullish tone of many managers is not backed by their allocations.

Some say they are being constrained by a lack of more sophisticated market strategies and techniques."

Dubai Holding Commercial Operations Group LLC, a real estate and hospitality group owned by the emirate’s ruler, will seek an extension on a $555 million revolving credit line until Nov. 30, three bankers with knowledge of the decision said.

All lenders to Dubai Holding Commercial agreed to extend the facility, said the bankers, who declined to be identified because the details haven’t been made public. The accord probably will be disclosed to Nasdaq Dubai tomorrow, they said. Dubai Holding Commercial in July received a two-month extension on the loan at the “commercial terms,” the company said then.

Dubai Holding Commercial is set to make an announcement tomorrow about the loan, a spokeswoman said, asking not to be named because of company policy. She declined to comment on whether the facility would be paid off or extended again.

Dubai shares rose to the highest in more than three months after U.S. jobs data and a U.K. manufacturing report bolstered confidence in global economic growth and investors bought shares before a Muslim holiday .

Emaar Properties PJSC, developer of the world’s tallest skyscraper in Dubai, advanced to the highest since May and Dubai Financial Market, the only Gulf Arab stock market to sell shares to the public, surged 5.3 percent. The DFM General Index jumped 2 percent to 1,568.88, the highest since May 31, at the 2 p.m. close in the emirate. The Bloomberg GCC 200 Index of Gulf stocks increased 0.7 percent.

“We were expecting the rally from the positive reaction we saw in the U.S. on last week’s data and during the last week of Ramadan,” said Saad al-Chalabi, institutional trader at Al Ramz Securities in Abu Dhabi. “Emaar broke through major technical levels yesterday, luring investors and fund managers back to the market.”

Deutsche Bank AG, the 17th-ranked adviser on bond sales in the Middle East and North Africa two years ago, vaulted to second place this year as credit markets in the region thawed following Dubai World’s debt restructuring.

Germany’s biggest lender advised on six bond sales worth $5.2 billion, second only to HSBC Holdings Plc, which has claimed the top spot for the past two years, according to data compiled by Bloomberg. The Frankfurt-based bank led Dar Al Arkan Real Estate Development Co.’s $450 million bond sale in February, the area’s first offering this year, as well as the Bahrain government’s sale of a $1.25 billion bond in March.

Bond sales in the Middle East are recovering after concern that Dubai World would default on its $23.5 billion of debt in November halted offerings in the region for almost three months. Companies and governments have raised $19.5 billion this year, 7 percent less than in the same period a year ago, the data show.

Nakheel PJSC’s plan to offer Islamic bonds to creditors may revive sukuk trading in the Persian Gulf after new sales fell to a five-year low, according to Moody’s Investors Service and Mashreq Capital DIFC Ltd.

Nakheel, controlled by state-owned Dubai World, may issue as much as $3.2 billion of five-year sukuk to pay contractors as part of its debt restructuring plan, JPMorgan Chase & Co. said in a report Aug. 26. Islamic debt issues from the Gulf have slumped 24 percent to $2.5 billion this year, according to data compiled by Bloomberg.

Contractors are likely to sell Nakheel’s sukuk to pay bills, Thomas Barry, chief executive officer of Arabtec Construction LLC, a unit of Arabtec Holding Co., the United Arab Emirates’ biggest construction company, said in an interview Sept. 2. “All contractors are in very bad situation with regard to cash flow because of nonpayment from many entities.”

Qatar’s stock market carried out a successful first day of trading using the Universal Trading Platform technology of NYSE Euronext, its minority shareholder.

Amid two display glitches, the new system successfully executed about 3,000 trades worth QR221m ($61m) on Sunday, in spite of the Ramadan lull, according to Andre Went, chief executive of Qatar Exchange.

He said that in the final auction about 5 per cent of the total daily volume was traded. The auction was carried out after the 1230 formal market closure to improve price determination and bring the exchange up to international best practice, Mr Went said.